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FCA investigating 29 advisers for enforcement action

The Financial Conduct Authority is currently investigating 29 financial adviser firms or individuals for enforcement action ranging from fraud to misselling.

Responding to a Money Marketing freedom of information request, the FCA says there are also two mortgage broker firms or individuals under investigation as of 13 May. There is also one firm under investigation that sells both mortgages and other forms of financial advice.

The enforcement actions relate to financial crime, mortgage fraud, misselling and the suitability of advice, treating customers fairly and systems and controls issues.

Advisers are also being investigated for breaches of anti-bribery and corruptions controls, competence or integrity issues, complaints handling, undertaking regulated activities without permission and promoting Ucis.

There are around 5,000 advice firms, or 14,000 firms including ARs, and around 20,500 financial advisers.  

Apfa policy director Chris Hannant says: “It is a small fraction under investigation and the level of adviser regulatory fees, around 10 per cent of all FCA fees, does not seem commensurate with the level of risk posed by the sector in light of these figures.”

Telos Solutions director Richard Farr says: “It is a small number but nobody wants to be in enforcement so one is too many. I would expect the number to rise as the FCA takes on new powers.”


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. And what will be done ? Nothing. People get sacked for fraud, bullying and theft in this industry and just get reemployed elsewhere. It is ridiculous.

  2. Anon @ 9.17
    They are not proven guilty yet. Or are they?

  3. What’s even more scary is that this is only people in the industry what about those individuals who are committing fraud posing as financial advisers or operating websites illegally.

    I recently submitted a Freedom of information request and found out that the unauthorised business Department of the FCA only has a budget of 2.6 million for 2013/2014. I understand from this information that they only employ 38 staff to monitor whole of the UK – no wonder we have such high levels of financial fraud and identity crime. That’s just over 0.5% of the entire FCA budget spent on clamping down on unauthorised advice givers and potential fraud by other unauthorised websites.

    Surely when the FCA has a statutory objective to protect the consumer they should be spending more money on cracking down on unauthorised advice givers than just 0.5%.

    No wonder why the FCA are so secretive about disclosure to the adviser community until recently as the fact are truly unbelievable.

    We have a government talking tough about regulations when in fact the unauthorised business Department’s budget was reduced by £300,000 over the last 12 months. Are we actually saying there is less unauthorised activity going on in the UK – I suspect not.

  4. Julian Stevens 5th June 2013 at 10:08 am

    1% of all complaints (not the absolute arbiter, of course, but a pretty reasonable base criterion) yet we’re forced to pay 10% of the costs of supporting the FCA (not to mention all the extra levies imposed on us by the FSCS). Not only to we have to pay excessively for the regulator but we have to pay as well for the consequences of regulator’s failures to do its job properly.

    From this, it seems not unreasonable to infer that the FCA is over-charging us by a factor of at least 10. Whatever happened to targeted, risk-based and proportionate regulation (and costs)? Still conveniently ignored.

    Based on this simple 1:10 ratio of risks to charges, how can Hector Sants have possibly had the gall to deny before the TSC in March 2011 (in the most tepid tones) that the regulator has no prejudicial agenda against small IFA’s?

    The facts tell us one thing whilst the regulator perpetuates a charging policy completely at odds with those facts.

  5. I find myself agreeing with Peter, why have I gone through all this crap and expense that is RDR only to come out the other side to find, some who didn’t even bother carrying on as normal ( or should I say introducing pfftt !!!)

  6. The comments made by Peter, who is rightly raising concerns about non regulated advice and fraudulent operators, do not have anything to do with the article. I am also disappointed that Chris Hannant takes the opportunity to raise objections about the level of consumer risk with the subscription levels, as if the FCA should take enforcing actions to those who pay them the most.
    I congratulate the FCA on investigating those that it feels do not show the level of ethics and trust that should be a pre-requisite of practice. Enforcement action on those who helped promote sales of fraudulent UCIS by recommending SIPPS to the bemused and desperate should have no place in this business and should be in gaol. Those who have aided mortgage fraud should join them as well as those who take bribes to promote unsuitable products.
    Good for you FSA, the more unscrupulous practitioners that are kicked out the better our industry will flourish.

  7. To Hickky

    I agree that unscrupulous practitioners need to be kicked out BUT why is the FCA only spending 0.5% of it budget on clamping down on unauthorised websites and advice givers.

  8. @ Peter Herd

    I agree that 0.5% ‘seems’ low but what is the correct figure?

    Has anyone asked them whether this is sufficient?

    Perhaps it’s too much?

    There certainly ‘appear’ to be a lot of unauthorised websites and advice givers. However, many of these are within the law based on technicalities that are more a reflection of the state of the law rather than any deficiency of the FCA.

  9. @Gre 1.28
    Since when did the FSA/FCA take any notice of the law?

  10. @ Anonymous 1:45

    The Financial Services and Markets Act gives the FCA wide discretion within the regulatory framework and over anyone who falls within it, e.g. advisers.

    However, we are talking here mainly about people who are outside of this discretion and therefore have the protection of the wider law – something advisers don’t benefit from.

    So, the answer to your question is ‘most of the time’ though it may not feel like it if you’re in the cage with them.

  11. So they do practise discrimination? contrary to EU & UK law.
    Democratic deficit.

  12. To Gre

    The FSMA 2000 and the FSMA2012 are actually quite clear in that the basic legislation states that to give advice or to promote services within financial services you should be authorised and regulated by the FCA. Of course there are some professions that can apply to be exempt approved like accountants and solicitors but they still need to register.

    In my investigations I have found that the UBD are actually using exemptions that are primarily designed to give permission for accountants, solicitors and indeed clients to make referrals to IFA’s.

    The specific piece of the legislation they refer you to is Article 33 RAO introducers exclusion:

    It is my opinion this piece of the legislation does not give carte blanche to marketing firms to advertise for financial services leads as this part of the legislation is primarily to exempt firms that have other sites to their business e.g. solicitors and accountants.

    I further believe that the FSA and FCA is effectively turning a blind eye to marketing firms and indeed some financial journalists who are in effect operating advice services and that the disguise of financial journalism.

    Even if you don’t take these particular points into consideration – with the rise of execution only sites we have certainly seen a rise in the so-called financial planner and even some accountants and solicitors giving advice and referring clients to execution only products to avoid authorisation.

    In my investigations I found that the UBD have no proactive regime the checks authorisations according to their response to my freedom of information requests.

    Do I think this is a problem – yes

    Should the adviser community be demanding a greater share of the FCA budget and indeed the MAS budget spent on enforcement and public awareness of the register of advisers? – Hell yes!!!!

  13. Grey Area (Gre - apologies) 5th June 2013 at 5:14 pm

    @ Peter Herd

    The devil is in the detail. Whilst the legislation might be ‘clear’, the words which we might attach certain common sense meanings to like ‘promotion’ and ‘regulated activity’ don’t really follow common sense.

    So a promotion is not a promotion unless there is an ‘invitation or inducement to engage in regulated activity’. Introducing someone to an adviser without ever intending to engage in such activity is not therefore a promotion and therefore outside of FSMA. Promoting a ‘service’ is, in itself, not a regulated activity unless you also engage in regulated activities.

    I could go on.

    The bottom line is that whilst I agree with you in principle I’m afraid your premise about unregulated businesses is probably flawed in most cases because of the technical exclusions. Hence the point I was making about the law being at fault.

    I’d also like to know, as per my previous comment, how much you think should be spent on this? Unless you have an idea of what would be appropriate then asking for ‘more’ is nothing but a rant.

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